OECD Pillar Two in Australia.

For global information on OECD Pillar Two and the global minimum tax for multinational groups in all markets, see Acclime Group’s guide.

Australia has enacted the OECD’s Pillar Two Global Anti-Base Erosion (GloBE) Rules through the Taxation (Multinational—Global and Domestic Minimum Tax) Act 2024 and its associated Imposition and Rules instruments, introducing the 15% global minimum effective tax rate for large multinational enterprise (MNE) groups. The Income Inclusion Rule (IIR) and the Domestic Minimum Tax (DMT), Australia’s Qualified Domestic Minimum Top-up Tax, apply for fiscal years beginning on or after 1 January 2024, and the Undertaxed Profits Rule (UTPR) from 1 January 2025.

The primary legislation received royal assent on 10 December 2024, with the detailed computational rules following in the Taxation (Multinational—Global and Domestic Minimum Tax) Rules 2024. The first GloBE filings, for a 31 December 2024 year end, fall due in 2026. This guide focuses on Australia’s implementation, filing obligations and local considerations.

At a glance

Local summary

Australia has adopted all three GloBE charging mechanisms through the Minimum Tax law. Where the jurisdictional effective tax rate (ETR) in Australia is below 15%, additional Top-up Tax may arise and be collected through the domestic minimum tax (DMT), the IIR or the UTPR. The DMT, intended to be a Qualified Domestic Minimum Top-up Tax, allows Australia to collect the Top-up Tax on low-taxed Australian profits before such tax may be imposed by another jurisdiction under the IIR or UTPR.

Scope and key concepts

The GloBE Rules apply to MNE groups meeting the EUR 750 million consolidated revenue threshold. In Australia, the rules apply to Constituent Entities located in Australia, and to foreign Group Entities with a GloBE permanent establishment in Australia, where the global group meets the threshold, even if the Australian entity’s own revenue is much lower.

How the mechanisms apply depends on where the Ultimate Parent Entity (UPE) sits. Where the group’s ETR in Australia is below 15%, Australian Constituent Entities are liable for a domestic top-up tax under the DMT, which takes priority over Australian profits before another jurisdiction can apply its IIR or UTPR. Where the UPE or an intermediate parent is in Australia, the IIR applies to low-taxed foreign group entities, with the UTPR operating as a backstop where Top-up Tax has not been fully collected elsewhere. Australian group entities are generally jointly and severally liable for any group entity’s Top-up Tax.

Local deviations

Based on our review, Australia’s Pillar Two framework generally aligns with the OECD GloBE architecture, with no fundamental substantive deviations identified to date. The Minimum Tax law is to be interpreted consistently with the OECD GloBE Model Rules, commentary and agreed administrative guidance, and the detailed computational rules are set out in the Taxation (Multinational—Global and Domestic Minimum Tax) Rules 2024.

Compliance and filing obligations

In-scope groups with Australian Group Entities are subject to the lodgment, payment and reporting requirements set out below. Australia’s Pillar Two compliance is split into two filing tracks, lodged electronically with the Australian Taxation Office (ATO), and operates separately from the ordinary income tax return.

Key deadlines

The two filing tracks

GloBE Information Return (GIR)

The GIR is the OECD standardised information return, lodged with the ATO as an XML file. It is informational only and does not itself give rise to a Top-up Tax liability, but an Australian Group Entity has a lodgment obligation even where its Australian tax amount is nil. The local obligation can be satisfied where the UPE or a Designated Filing Entity lodges the GIR in a jurisdiction that has a Qualifying Competent Authority Agreement (QCAA) with Australia, in which case a Foreign Lodgment Notification must instead be lodged through the CGDMTR. (Australia joined the GIR Multilateral Competent Authority Agreement in January 2026.)

Combined Global and Domestic Minimum Tax Return (CGDMTR)

The CGDMTR combines three obligations: the Foreign Lodgment Notification, the Australian IIR/UTPR Tax Return (AIUTR) and the Australian DMT Tax Return (DMTR). The AIUTR and DMTR form the basis of the ATO’s assessment of Australian IIR/UTPR tax and DMT tax respectively, and must be lodged even where the amount is nil, unless an exemption applies. Subsidiary members of Australian tax consolidated groups are often exempt from lodging the AIUTR and DMTR. A Designated Local Entity may be appointed to lodge on behalf of all Australian Group Entities on a ‘one-in, all-in’ basis.

Transitional safe harbours

Australia has adopted the OECD transitional CbCR safe harbour, allowing a qualifying jurisdiction to be treated as having no Top-up Tax for the transition period based on Qualified Country-by-Country Reporting data. The de minimis, simplified ETR and routine profits tests are explained in the Group guide.

Tax incentive impact

Pillar Two does not remove Australia’s tax incentives, but it can neutralise their benefit for large in-scope groups. Where an incentive reduces the effective tax rate below 15% (the R&D Tax Incentive is a common example) the shortfall may be recovered through Top-up Tax, effectively bringing the rate up to the 15% baseline. The Substance-Based Income Exclusion may provide partial relief based on local payroll and tangible assets.

Monitoring, audit and disputes

The ATO administers the global and domestic minimum tax within the existing tax administration framework, reported separately from the ordinary income tax return. For the transition period, the ATO has set out a reasonable-measures, ‘soft-landing’ approach to penalties and lodgment enforcement (PCG 2025/4), and groups may seek private binding rulings on specific Pillar Two matters. Shortfall interest and general interest charges can apply to underpaid Top-up Tax, and groups may pursue the usual dispute resolution routes against assessments or collection actions.

Key local issues

Two features of the Australian regime warrant particular attention: the size of the penalties and the interaction with the tax consolidation and controlled foreign company rules.

The regime also interacts with Australia’s existing tax framework. In a tax consolidated group, the head company is allocated the DMT and UTPR top-up tax amounts, while subsidiary members are often exempt from separate lodgment. The rules further interact with the controlled foreign company (CFC) regime, and both interactions should be mapped for each group structure.

Local contact

For advice on how Pillar Two applies to your group’s Australian operations, please contact Acclime Australia about our tax services regarding OECD Pillar Two.